To conclude our in depth look at the various stages of the Conveyancing Series – we have summarised the key highlights from the series below:
Whether you are buying or selling a home, it is a good idea to know how the steps involved and how the Conveyancing process works. Our seven-part guide has taken you through each step of the process for a typical property and purchase transaction.
This summary consolidates the steps covered across the series into an accessible and digestible guide to assist you in your property transaction, whether that be a sale or purchase.
THE STAGES OF CONVEYANCING
In short, the 6 stages in a Conveyancing transaction are:
- Instructing a conveyancer
- Pre-contract stage
- Conveyancing Enquiry stage
- Exchange of contracts
- INSTRUCTING A CONVEYANCER
Once you’ve agreed to sell your property, or had an offer accepted on a purchase, you will need to instruct a conveyancer. It is important to pass their details on to the Estate Agents.
- Instructing your conveyancer – A good indication of a quality service is accreditation to the Conveyancing Quality Scheme (CQS) which marks the firm out as meeting high standards in the residential conveyancing process. SO Legal are accredited with the CQS scheme and have a highly experienced team who would be delighted to assist you.
- You should receive a Client Engagement from your conveyancer outlining the fees, terms and conditions for business and request for identification.
- If you are selling….. Requirement to complete Protocol Forms which collate essential and important information about the property, including what fittings and contents the Seller wishes to leave behind. Also, pass on to your conveyancer any documents such as deeds, certificates, planning permissions and guarantees which relate to your property. If you have had building works done, any extensions, the central heating upgraded, the windows replaced, these are all relevant.
- If you are purchasing….Requests for proof of origin of funds to finance your purchase and monies payable for searches. More detail on this can be found below.
- PRE-CONTRACT STAGE
Everything from the point of agreeing the sale through the estate agent to exchange of contracts by your conveyancer, is termed the “pre-contract stage”. However, everything agreed up to this point, is still treated as part of the overall deal so it is important that as much information is collated at this stage.
Purchases – the Pre-Contract stage
Proof of origin of funds
There is the requirement to verify where the funds the purchaser is using to finance the purchase. Often now they are coming from a mortgage lender in the main part however, the portion that is coming directly from the purchaser, we will require evidence of its origin.
Importance for Lenders – If the search results reveal an issue with the property that could pose a risk to the lenders interest, it will be the responsibility of your conveyancer to report it to them, as it may affect the lenders decision whether or not to proceed with the mortgage.
Examples of evidence:
- Sale of property– the completion statement from your conveyancer who acted in the sale
- Inheritance – a copy of the Will showing the amount received
- Sale of a car– a copy of the contract for sale
- Wages– a copy of your P60 to evidence the amount payable towards the property
- Gift from a family member or third party – identification for the Donor as well as evidence of where their funds have come from. A gift letter for the Lender to sign is also required, in the event of a mortgage, to confirm the gift does not give them an interest in the property.
Also, the conveyancer will also require at the outset is a copy of your bank statements showing the monies in the purchaser’s bank account.
These are desktop reports carried out against the address of where you are purchasing to collate all the data available about the past and present of the property. They provide invaluable information that can be incredibly important in assisting you in making your decision on whether to proceed with your purchase.
Types of searches
- Environmental Search Report (flood, subsidence risk; energy schemes and contaminated land)
- Prepared using data held by the Environmental Protection Agency based on assessments of the property’s location. If the property fails its environmental report, your Lender will need to be notified and further information may need to be obtained.
- Water and Drainage Report
- Prepared by the local water authority and looks at whether the property is connected to the mains and drainage for foul and surface water is into public or private drainage systems. If drainage or supply systems to the property are private, your conveyancer will need to make enquiries with your Seller’s conveyancer as to what the arrangements are for payment of maintenance.
- Chancel Repair Liability Report
- Compiled by the search provider that looks at whether the property is within a district where chancel repair liability is claimed. Chancel repair liability is a very ancient law whereby the local parish could claim monies from parishioners for repairs to the local church. Your conveyancer is obliged to ascertain whether such a liability exists and if so, an indemnity insurance policy will need to be obtained to protect yourself and your lender to account for any costs if such a claim was made.
- Local Authority Search Report
- Compiled by the local authority for where the property is situated, and includes information regarding most of all the planning history for the property, including the building control records for any works carried out there.
Sales – the Pre-Contract stage
The seller is responsible for providing all the basic information about the property they are selling, in order for the conveyancer to compile the contract pack for the buyer’s solicitors review.
The contract pack contains:
- Draft contract – Drafted by your conveyancer using the information they have at the outset of the transaction in terms of names, purchase price and addresses.
- Transfer – This sets out who is transferring their legal title in the property and to whom.
- Title Documents – Title register: Contain rights and restrictions applicable to the property that the seller will have had to comply with during ownership. Title Plan: outline of the property as it is shown on the ground, checking all the boundaries are correct.
- Protocol Forms – as described earlier, the seller will complete these to their best knowledge about all aspects of the property, fittings and contents, and arrangements, if it is a Leasehold property, in respect of service charge, management and shared facilities.
- Planning permissions, certificates and guarantees – As mentioned earlier, it is important that as much evidence should be submitted by the Seller in relation to any alterations, works and maintenance they have had done on the property.
- THE CONVEYANCING ENQUIRY STAGE
What is the main purpose of this stage?
- The buyer’s conveyancer will raise enquiries based on the information they receive from the contract pack supplied by the seller’s conveyancer.
- ‘Buyer beware’ – this puts the onus on the buyer to investigate and discover any defects affecting the property before becoming legally bound at exchange. Once exchange has taken place there is no turning back, therefore obtaining relevant information beforehand by enquiring is crucial.
What enquiries might the seller and their conveyancer expect?
The conveyancing protocol tries to limit the number of enquiries by requesting that only property specific enquiries are raised. The enquiries will be based on the following;
- The Property Title register and Plan
- The Sales Contract – once this is approved, your conveyancer will arrange you to sign it.
- Pre-contract search results
- Information contained within the Protocol Forms
- Lenders requirements
- Buyers own enquiries
- If leasehold, management pack information
What happens if the seller cannot provide the answers to the enquiries that have been raised?
- Indemnity insurance is commonly used during conveyancing transactions to cover some sort of legal defect which can’t be resolved swiftly, or at all.
- This will be accepted by the buyer’s conveyancer when the buyer is otherwise satisfied with the property and simply wants to make protect themselves and any mortgage ledger against future problems
- The indemnity policy doesn’t remedy the defect – it simply provides financial compensation in the event of the defect causing a loss.
- EXCHANGE OF CONTRACTS
Once exchange of contracts has taken place, you will be legally bound to complete the transaction on the completion date as shown on the contract. Your conveyancer will have taken your instructions before legally committing you to the transaction, and you will need to authorise them to effect exchange on your behalf.
Standard Conditions of Sale.
These are all the little terms of the contract that you will be bound by once you have exchanged contracts. The most important ones are:
- Physical State
- Completion time
- Failure to complete
- Once exchange of contracts has taken place, your conveyancer will then work towards getting you ready to complete.
- The average time between exchange of contracts and the completion date is around 5-7 working days but this can vary depending on your circumstances and the circumstances of your chain.
Congratulations, you have reached the day of completion!
- Legal completion has occurred when the selling conveyancers have received the completion monies from the purchasing conveyancers.
- Once the completion monies have reached the sellers’ conveyancers they will contact the buyers’ conveyancers and the Estate Agents. The buyer will then be alerted by their conveyancer that completion is confirmed.
- Once purchase monies have been received, completion will be confirmed and these sale proceeds will be transferred to the seller
- The conveyancer will redeem any existing mortgage secured on the property, pay the Estate Agents They will also send the transfer the seller signed to the conveyancers for the purchaser to facilitate their post completion works.
Completion has happened and you have now received your keys or sale proceeds – congratulations!
- POST – COMPLETION
- Stamp Duty Land Tax – Within 30 days of the completion of a Transfer, Assignment or Lease, a Land Transaction Return must be completed and sent to HMRC along with payment of the SLDT at the applicable rate.
- Activation of indemnity policies – to ensure that the cover comes into force on the day of completion, protecting the buyer and any lender financially against issues that may arise out of the defect.
- Registration – The conveyancer will apply to the Land Registry to register the buyer’s new interest in the property.
- Receipt of the Registered Title – buyer’s new interest has been successfully registered, their conveyancer will inform them that registration has completed and that their matter will be closed. The conveyancer will also make any lender aware that registration has completed and supply evidence that their charge has been registered.
- Activation of Indemnity Policies – If the seller has agreed to cover the cost of such a policy, this will be activated. The indemnity policy will then be sent to the buyer’s conveyancer along with the post-completion documentation
- Redeem any charges that have been registered against the Title – for example, in favour of a mortgage lender, private individual or any third party.
- Settling the Estate Agents invoice – the Estate Agents commission for dealing with the marketing of the property will be due and this will be paid from the sale proceeds.
- Settling Service Charge and Ground Rent arrears – if the property is leasehold any arrears in the seller’s service charge or ground rent account, the conveyancer will settle the balance out of the sale proceeds
- Accounting to the seller for any sale proceeds and closing the matter – they would like the net proceeds of sale to be returned to them. The payment will either be made by way of a bank transfer or a cheque made payable directly to the seller
This concludes our summary of the conveyancing process.
At SO Legal our Eastbourne, Brighton and Uckfield Conveyancing lawyers provide swift, efficient and cost effective legal solutions for all your conveyancing needs. Call us TODAY on 01323 407555 or email email@example.com